Young people say they want to save into a pension - as long as they can dip into it to buy their first home

Young people would be more likely to save into a pension if they were allowed to dip into their pot for a deposit on a first home, a survey reveals.

Some 58 per cent of 18-35 years olds aren't saving anything for retirement, but 54 per cent say they would either start saving or save more if they could also use that money to get on the property ladder.

House prices have jumped so much in recent years that many people are forced to save massive sums before they have a chance of getting a mortgage, which means they don't have money to put aside for other important goals such as a comfortable retirement.

Life ambitions: Young people would be more likely to save into a pension if they were allowed to dip into their pot for a home deposit

The survey from NOW: Pensions found the main reason people gave for not putting aside money for a pension was that they were prioritising saving elsewhere - some 43 per cent offered this answer, while 25 per cent said they didn't have enough money and 14 per cent were paying off debts instead.

The research highlighted an appetite for more flexible pension saving products that allow withdrawals when people have other big financial ambitions at different stages of life.

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Finance industry experts have issued calls in the past for tax-efficient Isas and pensions to be merged into a single lifetime savings scheme, but such ideas have failed to find favour with successive Governments so far.

However, the current Government's pension freedom reforms will allow over-55s to unlock their entire lifetime savings to spend, save or invest as they wish next month, and if the changes prove popular and successful more innovations could follow.

In this month's Budget, Chancellor George Osborne also launched a Help to Buy Isa, making a gift of £250 for every £1,000 of deposit saved up for a first home, showing there is keen political awareness that young buyers are frustrated about the difficulties of buying a property.

But opponents have voiced doubts about the policy, suggesting it will be a £3,000 perk for younger people with wealthy parents who can afford to help them save up to £12,000 in the first place.

There are also concerns that taxpayers subsidising people who can't afford property otherwise will just drive up prices further and potentially contribute to another bubble, rather than solve the underlying problem of demand for homes outstripping supply due to a housing shortage.

Morten Nilsson, boss of pension provider NOW: Pensions, said: 'The nature of pension saving is fundamentally changing. With over-55s being afforded greater flexibility with how they access their pension pot at retirement, perhaps now is the time to think about whether more flexibility should be extended to young savers to help incentivise saving.

'With so many pressures on young people’s finances, it’s understandable that pension saving can fall down the priority list.'

Pension freedom: Over-55s will be able to unlock their entire lifetime savings to spend, save or invest as they wish from next month

Nilsson pointed to Halifax data showing the average deposit paid by a first-time buyer last year was 'a staggering £29,218 putting home ownership out of the reach of many'.

He said: 'By giving young savers the option to access a portion of their pension fund to get on the property ladder, the government could simultaneously boost pension saving and ease the financial pressure on first time buyers.

'A similar initiative has worked well in New Zealand with savers in the country’s KiwiSaver workplace pension scheme having the option to receive a first home subsidy after three years of saving.'

The survey from NOW: Pensions also found:

* Some 61 per cent of 18 to 35-year-olds say they are concerned or very concerned that they won’t have enough money when they retire

* More than half or 52% of those that don’t currently save would begin doing so if their employer offered a more generous contribution

* And 42 per cent would start putting money aside if a kickstart payment was offered by the Government

* Some 25 per cent said being able to access savings during times of financial hardship or when facing serious illness would encourage them to save or save more into a workplace pension

* More education is desired with 86 per cent saying further teaching about pensions is needed and 23 per cent saying they would be more inclined to save if they had a better understanding of pensions

* Four in ten of those who think more education is needed thought this was the Government's responsibility.